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Case note: unlicensed social media ‘finfluencer’


In Australian Securities and Investments Commission v Scholz (No 2) [2022] FCA 1542 Justice Downes of the Federal Court of Australia decided that contrary to section 911A of the Corporations Act 2001 (Cth), the defendant, Mr Tyson Scholz, carried on a financial services business between at least early 2020 and November 2021 on Discord (via the Black Wolf Pit Channel) without an Australian financial services licence.

Mr Scholz posted positive stories (being posts viewable for only 24 hours) about particular companies on an Instagram account, which often indicated that he had acquired shares in that company or that he thought that shares in that company would be a good investment. A likely consequence of his conduct was that it would influence viewers of his stories to acquire the shares and his shareholding would increase in value when that occurred.

ASIC alleged Mr Scholz was carrying on a financial services business by providing financial product advice, regarding share trading on the ASX, without a licence by:

  • delivering training courses and seminars about trading in ASX-listed securities during which he made recommendations about share purchases
  • promoting those courses and seminars on Twitter and Instagram using the handle ‘@ASXWOLF_TS’
  • making share purchase recommendations on private online forums (that he administered) and on Instagram.

Mr Scholz’s business to paying subscribers included:

  • subscription/membership fees of $500, $1,000 or $1,500
  • offers of various levels of share trading training, referred to as ‘Stage 1’, and ‘Stage 3’ packages, which were marketed as introductory or advanced seminars
  • offers of individual one-off share trading suggestions, or tips for a fee
  • the Stage 2 package providing one year’s access to a private chat site, named ‘Black Wolf Pit’, using the online communications platform Discord.

Mr Scholz argued that the exemption in section 911A(2)(eb) for general advice on information services applied.

Justice Downes concluded that the evidence did not establish that the exemption in s 911A(2)(eb) applied with the consequence that Mr Scholz was required by s 911A(1) Corporations Act to hold an Australian financial services licence for the purposes of carrying on his financial services business.

While there was no evidence that any advice which Mr Scholz gave constituted personal advice and it was accepted by ASIC that the advice given by Mr Scholz on Instagram and over Zoom (in respect of the Stage 1 seminars) and Discord (via the Black Wolf Pit Channel) was provided in the course of, or by means of, transmissions that Mr Scholz made by means of an information service, being a service provided by the internet, Justice Downes found that the direct messages between Mr Scholz and an individual member of the Black Wolf Pit Channel were not able to be accessed by other members of the Stage 2 group, let alone the public. It was not established that all transmissions made by Mr Scholz were generally available to the public.

Justice Downes concluded:

“Indeed, the evidence was replete with examples of Mr Scholz expressing opinions and making recommendations about the purchase of shares by transmissions made by him on the Black Wolf Pit Channel. Importantly, no suggestion was made in cross-examination of any witness called by ASIC that there existed other transmissions made by Mr Scholz within the Black Wolf Pit Channel which did not contain financial product advice. These matters provide a further reason to conclude that s 911A(2)(eb)(iii) was not satisfied. Therefore, it was not established that the sole or principal purpose of the transmissions by Mr Scholz was not the provision of financial product advice.”

ASIC is seeking orders that Mr Scholz is prohibited from:

  • promoting or carrying on the business of providing recommendations or statements of opinions about the purchase of shares in return for payments of money or other benefits
  • directly or indirectly carrying on any financial services business in Australia
  • receiving, soliciting, transferring or disposing of customer funds received in connection to providing recommendations or opinions about the purchase of shares.


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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
Email: djacobson@brightlaw.com.au
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

The post Case note: unlicensed social media ‘finfluencer’ appeared first on Bright Law.


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